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Senate, House Sparring Over 'Double Direct' Tax

Dave Dugdale

Legislators are taking another stab at streamlining the so-called "double direct" tax exemption for business.

Farms and manufacturers don‘t owe sales tax on equipment if it‘s directly used in production. The difficulty in interpreting that test prompted Governor Pence to make it a key element of his tax simplification bill.

But the House deleted the simplifications after analysts reported they would cost the state a quarter-billion dollars a year.

The Senate Tax and Fiscal Policy Committee has since reinserted the provision in a scaled-back form covering just a portion of the manufacturing process.

Rep. Todd Huston (R-Fishers) says the modification brings the bill back to Pence‘s goal of keeping the changes revenue-neutral.

The bill would also repeal Indiana‘s "tax throwback," in which the state collects taxes on goods shipped from Indiana to states which have no corporate tax. Trucking companies warn the rule is costing them customers.

Conexus Indiana Logistics Council Vice President David Holt says the proposed change would make Indiana more competitive to outside investors.

Senate Budget Committee Chairman Luke Kenley say the debate has been framed incorrectly all along -- it's not about simplicity, he says, it's about equity.

The proposal makes up the lost revenue primarily through a one-time tax amnesty. But the bill also abolishes 20 seldom-used tax credits and deductions to save about six-million dollars a year.

The committee approved the bill along party lines, with even Republicans saying there are still questions that need to be answered.